Canonical has explained why it has licensed H264. As it turns out, the license does not cover the distribution as a whole - since Ubuntu is entirely Free software, the license cannot be included. Canonical has licensed H264 so that it can offer it as an option to OEMs, just as it does with Flash, Fluendo, and some others. Since this is just an option for OEMs, it does not mean that every pre-installed Ubuntu system comes with the H264 license - it depends on whether or not your OEM decided to include it (good luck finding that out). And people actually promote this complicated spaghetti licensing situation.

In effect the cd can then no longer be (re)distributed. Let just say a GPL code is pressed on a cd and a completely unrelated proprietary code is also pressed on the same cd. The effective (re)distributivity of the cd will fall on the more restrictive license(the proprietary one) and GPL does not allow any further restrictions to be added, right?can someone just take one of these images, make copies and start distributing them to anybody who cares to have one? i think not. If the aggregate work can not be (re)distributed, the aggregate work violates the terms of GPL(me think).

The aggregate (the cd) is not distributed under the GPL. Some of the packages on the CD are distributed under the GPL. Distribution under the GPL requires that the GPL components are re-distributable. They are.

Most distributions even provide users with a tool to re-master CDs for the purposes of re-distribution. This is how a whole batch of spin-off Linux distributions are "born".